Sunday, July 12, 2015

The Oil and Gas Industry Want it All...

The Oil and Gas Industry Want it All and they'll get it, only if we let them.

Years ago I mentioned that there were as many as sixteen 'known shale layers' beneath the Marcellus that were potentially 'rich with oil' and that is what the industry was really going after. 

Among the known deep shale plays not mentioned in this article are: the Tennessee, the Matata, the Heron, the Horizon, the South Beach, and the Devonian. 

One industry operator candidly told me that eventually they are planning on drilling down into shale layers as deep as 43,000 feet! 

Now the oil and gas industry is aiming at going after twelve of them, and the PA/SEP is already issuing permits for about 900 new wells.   

This industry, with the co-operation of our corrupt legislature - [*now ranked the fifth most corrupt state legislature in the US,] will turn all of Pennsylvania into a third-world fossil fuel extraction colony.   

If the citizens of Pennsylvania do not find the courage and conviction to rise up en mass to stop this industrial insanity now, we will be left with only two options: 1) Adapt to living in a toxic, polluted, industrial extraction colony, or 2) move away. 

Once again, I'd like to pose the question to those who think this can be effectively managed/regulated - "Where is the regulatory model to support that thinking?"  

The time for half-measure, negotiations, and political solutions is past. 

*This article that first appeared in the Times-Tribune Scranton, PA was in the latest Shale Play Media online publication. 

Other shales than Marcellus drawing industry attention

The Marcellus Shale put Pennsylvania on the map as a gas-producing state, but other rock layers have the potential to keep it there far into the future.
Drillers have sought unconventional well permits for 12 geological formations other than the Marcellus, according to state records compiled and organized by The state Department of Environmental Protection has issued permits for about 900 wells, site developer Carl Hagstrom said. Most of those are in the western part of the state; about 520 of those have been drilled.
Other than the Marcellus, which has more than 15,000 well permits, the most popular target formations in Pennsylvania are the Utica Shale with 258 permits, the Burket/Geneseo Shale with 246 permits and the Point Pleasant Shale with 159 permits. Although sometimes listed separately, the Point Pleasant is technically considered part of the Utica, according to a presentation by the Pennsylvania Geological Survey.
“They are all classic formations that have new life due to horizontals with classic hydraulic fracturing,” Lackawanna College School of Petroleum and Natural Gas dean Richard Marquardt said in an email. “They are all basically silty shales.”
These black shales with high organic content were formed over hundreds of millions of years ago when organisms, most likely algae, died then settled to the bottom of the ocean, said Allegheny County petroleum geologist Gregory Wrightstone, who has more than 35 years’ experience with unconventional formations in the Appalachian Basin.
Over millenia, heat and pressure broke down this organic material and formed natural gas.
The amount of oil and gas in a rock layer is dependent in part on how much heat or pressure affected it, a trait known as “thermal maturity.” Gas companies have to drill exploratory wells to learn how thermally mature a formation is in certain sections.
Though the Utica/Point Pleasant and Burket/Geneseo formations lie under most of the state, including all of Northeast Pennsylvania, most of the recent exploration has focused on the west and southwest.
Still, companies such as Seneca Resources Corp. and Shell have drilled into them as far east as Tioga and Lycoming counties.
“The question is how far east can you push the Utica in terms of thermal maturity,” Mr. Wrightstone said. “That’s a multibillion-dollar question.”
Although persistently low gas prices have driven down profits and forced many gas companies to cut back on drilling new Marcellus wells, they may try exploring some of these other formations, Pennsylvania Independent Oil and Gas Association president Louis D’Amico said in an email.
“They would like to see what potential for the future lies with these formations,” he said. “It’s one way to justify not further reducing their staffs during these tough times.”
With massive amounts of gas locked up in the Marcellus, Utica/Point Pleasant and Burket/Geneseo, Pennsylvania has many decades of production to come, Mr. Wrightstone said.
The industry considers the threshold for a “supergiant” gas field to be 30 trillion cubic feet, he said. The Marcellus holds more like 800 trillion cubic feet, he said.
“We should really coin a new term for the Marcellus,” he said. “We should probably call it something like a megagiant.”
The Utica/Point Pleasant is also a world-class reservoir and, while the Burket/Geneseo is like the Marcellus’s “little brother,” it still likely holds more than 30 trillion cubic feet , he said.
“In any other time it would have been this absolutely incredible field, and it’s a yawner,” he said.
One secret to the productivity of East Coast shales relative to others lies in their brittleness, said independent completions consultant Larry Fulmer, who has worked on naturally fractured oil and gas reservoirs for 40 years.
“The East Coast is blessed with ancient, ancient rock,” he said.
While hydraulic fracturing does create new cracks in the target rock, unconventional well production is tied to existing fractures, he said. An old, brittle shale holds more existing fractures than the pliable shales seen in many other parts of the world.
“Shales are barriers in a lot of the rest of the world,” he said. “On the East Coast, shales are formations.”
Searching for wells by formation is now available on Mr. Hagstrom plans to add new information that will help users compare production from various layers.

Friday, July 3, 2015

Energy Independence or Profitable Export?

Energy Independence
or Profitable Export?
by John Trallo, aka: Citizen Sane
You've seen the TV commercials and heard the sound bite ad nauseam:  "Natural gas offers American energy independence." It stands to reason, therefore, that a resource developed to offer energy independence to the United States ought to stay within U.S. borders. So why is the industry pushing so hard to liquefy America's natural gas and ship it overseas? Increased profits, of course. Right now, consumers in China, Japan and elsewhere are paying 400% - 500% more for natural gas than Americans. The industry wants to keep investors happy by making the most of the higher global prices, and par for the course, the industry is talking out of both sides of its money-hungry mouth.
On one hand, the oil and gas industry states that domestic natural gas prices in parts of New England have risen because of "stranded resources" due to the lack of pipeline infrastructure. Kim Watson, Kinder-Morgan's eastern pipeline group president, went as far as to say: "New England has paid more than $7 billion in the last 2 years than what it would have with access to supplies in Pennsylvania, West Virginia, and Ohio." Yet opponents have been saying that pipelines shouldn't be built because consumers would be paying too much. The industry also claims, "America's newfound abundance of natural gas is powering a remarkable manufacturing renaissance, which to date has generated more than $110 billion of announced investment in over 120 different manufacturing projects, and is already responsible for an impressive 68,000 manufacturing jobs this year."
On the other hand, the oil and gas industry is pushing for more LNG exports to Free Trade Agreement countries (FTA) and non-FTA countries as well. The push is enough to raise concerns among U.S. consumers and manufacturers.
The Federal Energy Regulatory Commission (FERC) is the agency that oversees and permits interstate pipelines. (NOTE: FERC receives zero dollars in congressional funding and 100% of its funding from the fossil fuel industry.) With FERC approval comes the power of eminent domain, defined as authorization "for the government or the condemning authority, called the condemner, to conduct a compulsory sale of property for the common welfare, such as health or safety. Just compensation is required, in order to ease the financial burden incurred by the property owner for the benefit of the public." This definition begs the question: How is exporting a natural resource to foreign countries a "benefit of the public"?  In reality, it isn't.
Corporations accomplish this is by minimizing operating costs via deregulation and a host of cost and corner-cutting measures, and by selling the product/service in the highest paying market. Currently, the overseas price for natural gas is four to five times that of the current U.S. domestic price.
The law of supply and demand
Economics 101 tells us that as supplies decrease, consumer prices rise. Since overseas exports increase demand, which puts more pressure on supply, exports will cause the price of gas in the U.S. to rise. As long as domestic prices are below overseas prices, oil and gas corporations are feverishly trying to sell as much product overseas as possible, thereby forcing domestic prices to rise toward overseas prices.
So, on one hand you have the industry claiming that domestic prices are "too high due to lack of infrastructure," and on the other hand, you have the same industry calling for more export facilities because the domestic price is too low and investors are not getting the highest return on their investment.
In commenting on the New York state fracking ban vs. gas drilling in PA, Governor Tom Wolf said he wanted to "have his cake and eat it too". The oil and gas industry is doing the same thing, but neither Wolf nor the industry can have it both ways. What'll it be, U.S. energy independence or exports for profit?